Veidekke ASA: Increased revenues and order book

Veidekke ASA: Increased revenues and order book

15.11.2018 - 07:32

Veidekke boosted its revenues by 11% in the third quarter and delivered pre-tax profit of NOK 460 million. The company’s order book increased to NOK 33.8 billion.

“Although Veidekke has delivered higher revenues, we are not satisfied with our recent profitability trend. Over the past months we have therefore implemented organisational changes and have introduced a stricter risk assessment regime. We have also introduced measures to cut costs and are being more selective with regards to which new projects we consider taking on,” says Arne Giske, Group CEO of Veidekke.

Veidekke achieved revenues of NOK 8.8 billion in Q3 2018, compared with NOK 7.9 billion in the same quarter of 2017. Growth came primarily in the construction business, while revenues from the property development operation fell. The pre-tax profit was NOK 460 million, compared with NOK 498 million for the same period last year. The quarterly order intake amounted to NOK 6.5 billion and brought the total order book to NOK 33.8 billion as at quarter-end.

According to the segment accounts, the profit per share came in at NOK 3.1 (Q3 2017: NOK 3.2), in accordance with the segment accounts. Veidekke’s construction operations generated revenues of NOK 7.0 billion (Q3 2017: NOK 6.0 billion) and a pre-tax profit of NOK 208 million (Q3 2017: NOK 160 million) in the third quarter. While all three countries reported higher revenues, the greatest increase was achieved in Norway.

“ Although the construction operations have boosted revenues significantly in all three countries, performance varies between the business units. With effect from this quarter, we have therefore reorganised our Norwegian construction operation in two business units; Building Construction and Civil Engineering. The aim is to improve profitability and bring products and solutions to market that meet customer needs even more successfully,” says Arne Giske.

In the property development business area, revenues dropped to NOK 460 million in Q3 2018, from NOK 684 million in Q3 2017. The pre-tax profit for the quarter was NOK 65 million (Q3 2017: NOK 141 million). The profit decline is primarily attributable to the Swedish operation. In total, 153 residential units (Q3 2017: 147) were sold in the third quarter, including jointly owned projects. The sales ratio for all units under construction was 80%.

“The market for new residential units has improved somewhat in Norway, but in Sweden, and particularly in Stockholm, the market is still weak. The number of units under construction remains relatively high, but the number of new building starts in Sweden is low, which will affect the level of activity in the upcoming months,” says Arne Giske.

The industrial operation generated revenues of NOK 1.7 billion in Q3, on a par with last year’s figure. The pre-tax profit totalled NOK 195 million (Q3 2017: NOK 218 million). This profit decline is due to reduced asphalt volumes resulting from delays in major road projects and extreme weather conditions in September, as well as higher capacity and raw material costs in the asphalt operation. Veidekke’s LTI rate (the number of lost time injuries per one million hours worked) for the preceding 12 months was 5.2 at the end of the third quarter, compared with 5.3 in Q2 2018 and 4.6 in Q3 2017. The sick leave rate was 3.4%, on a par with the preceding quarter and down from 3.6% one year ago.

Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. The company is known for its involvement and local knowledge. Its annual turnover is NOK 32 billion, and half of its 8,000 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.